Today's State Budget - Tomorrow's Problem
16 June
Queensland businesses will bear much pain from this State Budget and accordingly want to see further action taken to find savings within Government.
The loss of the State Fuel Subsidy will be a huge blow to the state’s business community at a time when they can least afford it. The 25 per cent payroll tax rebate on apprentices and trainees is worth only $15 million compared to $2.7 billion in payroll tax already paid by business.
Queensland will unfortunately lose its low tax status this year, with Western Australia inheriting the distinguished honour.
Chamber of Commerce & Industry Queensland acknowledges the extraordinarily difficult environment this State Budget has been prepared in, however believes an opportunity is present to implement massive change given Queenslanders are well aware the budget must inevitably be balanced.
Unfortunately, this State Budget does not make the difficult decisions necessary to restore confidence in the business community. The State Budget is predicting that, unlike the Australian economy, the Queensland economy will enter a technical recession with economic growth forecast for 2009-10 to be -0.5 per cent. Additionally, Queensland's unemployment rate will increase from 5.3 per cent to peak at 7.25 per cent in 2010-11.
Queensland's first deficit of many is forecast to be $574 million in 2008-09, increasing to $1.9 billion in 2009-10. The deficit will peak at $4.1 billion in 2011-12 and the budget will not return to surplus until at least 2016-17. There will be at least two State Elections prior to the Budget returning to surplus, which effectively leaves the budget dilemma for other State Government's to solve. This State Budget will not restore the state's vitally needed AAA credit rating.
Of concern to the business community is that State Government expenditure will increase by 7.4 per cent in 2009-10 and State Government wages, salaries and superannuation will increase by 9.1 per cent. CCIQ challenges the State Government to identify any private sector company that will have its wages bill increase by this mount. More could be done to introduce efficiencies within Government.
Indeed, 80 per cent of the forecasted 2009-10 ($1.9 billion) budget deficit could be slashed if the wages bill was capped at 2008-09 levels. CCIQ believes the Queensland community would understand the public sector has to bear some of the responsibility for cost saving measures.
The 12.8 per cent increase in infrastructure spending that will occur for 2009-10, which will boost the economy will definitely benefit Queensland businesses both now and into the future.
Businesses may rightly feel that as a consequence of this Budget that they are on their own for at least the next 12 months, however, CCIQ will continue to make representations to the State Government for meaningful actions that lower the cost of doing business.
CCIQ will invite the Treasurer to meet with key business stakeholders to convey the rationale behind the Budget's framing and contents.
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Media contact
David Argus
General Manager - Public Relations & Media
Chamber of Commerce & Industry Queensland
t: 07 3842 2263